FISCAL YEAR 2008 REPORT

TO THE CONGRESS

U.S. GOVERNMENT RECEIVABLES 

AND 

DEBT COLLECTION ACTIVITIES 

OF FEDERAL AGENCIES 

Department of the Treasury

July 2009
REPORT TO CONGRESS: RECEIVABLES AND DEBT COLLECTION ACTIVITIES OF 

FEDERAL AGENCIES 

 

1

FISCAL YEAR 2008 REPORT TO THE CONGRESS 

U.S. GOVERNMENT RECEIVABLES AND 

DEBT COLLECTION ACTIVITIES 

OF 

FEDERAL AGENCIES 

I - EXECUTIVE SUMMARY ..................................................................................................................... 2

A - LEGISLATIVE REQUIREMENT TO REPORT............................................................................................... 2

B - SCOPE OF REPORT.................................................................................................................................. 2

C - SUMMARY ............................................................................................................................................. 3

D – LEGISLATION ........................................................................................................................................ 3

II - GOVERNMENT DEBT PORTFOLIO, COLLECTIONS AND WRITE-OFFS............................. 4

A - FISCAL YEAR-END DATA ...................................................................................................................... 4

1. Receivables and Delinquencies..................................................................................................... 4

2. Write-offs....................................................................................................................................... 7

3. Interest, Penalties and Costs......................................................................................................... 7

B - REFERRAL TO TREASURY UNDER THE DCIA......................................................................................... 8

III - GOVERNMENT-WIDE DELINQUENT DEBT COLLECTION ACTIVITIES .......................... 9

A - TREASURY OFFSET PROGRAM (TOP) .................................................................................................... 9

1. Description..................................................................................................................................... 9

2. Referrals....................................................................................................................................... 10

3. Collections ................................................................................................................................... 10

B - CROSS-SERVICING AT FMS ................................................................................................................. 11

1. Description................................................................................................................................... 11

2. Referrals....................................................................................................................................... 11

3. Collections ................................................................................................................................... 11

C - HHS’S DEBT COLLECTION CENTER..................................................................................................... 12

1. Description................................................................................................................................... 12

2. Referrals to PSC.......................................................................................................................... 12

3. Collections at PSC....................................................................................................................... 12

D - LITIGATION AT THE DEPARTMENT OF JUSTICE (DOJ) ......................................................................... 13

1. Description................................................................................................................................... 13

2. Referrals....................................................................................................................................... 13

3. Collections ................................................................................................................................... 13

E - EDUCATION STUDENT LOANS.............................................................................................................. 14

F - USE OF PRIVATE COLLECTION AGENCIES (PCAS) ............................................................................... 16

1. Description................................................................................................................................... 16

2. Referrals....................................................................................................................................... 16

3. Collections ................................................................................................................................... 17

APPENDIX I: FEDERAL RECEIVABLES AND DELINQUENT DEBT........................................... 18

APPENDIX II: SOURCES OF DATA ..................................................................................................... 19
REPORT TO CONGRESS: RECEIVABLES AND DEBT COLLECTION ACTIVITIES OF 

FEDERAL AGENCIES 

 

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I - EXECUTIVE SUMMARY

A - LEGISLATIVE REQUIREMENT TO REPORT

The Debt Collection Act of 1982 as amended by the Debt Collection Improvement Act of 

1996 (DCIA) directs the Secretary of the Treasury (Secretary) to report to Congress 

annually on the management of debt collection activities by the head of each Federal 

agency. This report includes information that the agency heads provide to the Secretary 

on the status of loans and accounts receivable that each manages. See 31 U.S.C. § 3719. 

B - SCOPE OF REPORT

This report summarizes the information provided by Federal agencies concerning their 

receivables as reported to the Department of the Treasury (Treasury) and as contained in 

the Treasury Report on Receivables and Debt Collection Activities (TROR). It includes 

information about total receivables, collections on receivables, delinquencies, collections 

on delinquencies, and write-offs. 

As a point of clarification, receivables and delinquencies as reported on the TROR do not 

include debts that have been written-off. Debts that are written-off are classified as either 

Currently-Not-Collectible (CNC), or closed out on the TROR. Though written-off and 

not counted as receivables or delinquencies in the TROR, debts that are classified as 

CNC are included when determining eligibility for referral to Treasury for mandatory 

offset and Cross-Servicing. See Referral to Treasury Under the DCIA, Part II, Section B 

of this report. 

This report also summarizes key Government-wide actions to collect delinquent debt, a 

specific concern that led to the passage of the DCIA. Additionally, this report highlights 

several special and/or unique collection activities and accomplishments by certain 

Federal agencies. 
REPORT TO CONGRESS: RECEIVABLES AND DEBT COLLECTION ACTIVITIES OF 

FEDERAL AGENCIES 

 

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C - SUMMARY

• Since the enactment of the DCIA in April 1996, through September 30, 2008, 

$37.4 billion has been collected to pay delinquent debts through Treasury’s Financial 

Management Service’s (FMS) Treasury Offset Program (TOP) and Cross-Servicing 

Program (Cross-Servicing). 

• Total collections by FMS, exclusive of offset of the 2008 stimulus payments, on 

delinquent debts through TOP and Cross-Servicing were $4.41 billion in FY 2008. 

This is the highest amount collected by FMS in a single fiscal year since FMS began 

government-wide delinquent debt collection programs in 1996. Annual collections 

through these programs have averaged over $3.6 billion during the last five years. An 

additional $1.51 billion was collected through TOP from the 2008 stimulus payments 

for an FMS FY 2008 total of $5.9 billion. 

 

• In FY 2008, the Department of Justice (DOJ) collected $2.8 billion in cash recoveries 

on delinquent debts owed to Federal agencies through its civil litigation program. 

DOJ has collected a total of $15.5 billion through civil litigation in the last five fiscal 

years. 

• In FY 2008, private collection agencies (PCAs) under contract with the Department 

of Education (Education), the Department of Health and Human Services (HHS) and 

FMS had referrals of $28.4 billion in delinquent Federal debt. These PCAs collected 

$759 million in FY 2008. 

• The Federal Government collected $171.4 billion in FY 2008 on all of its non-tax 

receivables. See Appendix I, Federal Receivables and Delinquent Debt.

D – LEGISLATION 

Two proposals to enhance FMS’s debt collection program were passed into law in FY 

2008: 

1. Elimination of the 10-year statute of limitations for collection of delinquent 

Federal debts by administrative offset; and

2. Authorization to offset and levy Medicare payments to collect delinquent nontax, 

child support and Federal tax debts. 

Authorization to offset federal tax refund payments to collect delinquent state 

unemployment insurance debts resulting from fraud was also passed into law. 
REPORT TO CONGRESS: RECEIVABLES AND DEBT COLLECTION ACTIVITIES OF 

FEDERAL AGENCIES 

 

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0%

50%

100%

Distribution of Receivables and Delinquencies 

as of 9/30/08

Administrative Debt* $64.6 $16.6

Defaulted Guaranteed

Loans

$41.3 $28.9

Direct Loans $260.8 $29.0

Receivables in 

Billions

Delinquencies 

in Billions

II - GOVERNMENT DEBT PORTFOLIO, COLLECTIONS AND 

WRITE-OFFS

A - FISCAL YEAR-END DATA

1. Receivables and Delinquencies 

• The FY 2008 total receivables of $366.6 billion represented an increase of $27.0 

billion from the previous year, and total delinquencies of $74.5 billion represented an 

increase of $9.6 billion. 

• At the end of FY 2008, Federal loan programs (direct and guaranteed) comprised 82.4 

percent of total receivables, up slightly from 81 percent at the end of FY 2007. 

Federal loan programs comprised 78 percent of total delinquencies, also up slightly 

from 76 percent at the end of FY 2007. 

$121.9

$145.0

$164.4

$159.6

$171.4

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

$220

Dollars in Billions

2004 2005 2006 2007 2008

Fiscal Year

TOTAL COLLECTIONS ON RECEIVABLES

$310.8 $310.3 $318.8 $339.6

$366.6

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

Dollars in Billions

2004 2005 2006 2007 2008

Fiscal Year

TOTAL RECEIVABLES

*Examples: Fines, penalties and overpayments. 
REPORT TO CONGRESS: RECEIVABLES AND DEBT COLLECTION ACTIVITIES OF 

FEDERAL AGENCIES 

 

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Federal loan programs are authorized when private sector credit is unavailable or 

inadequate, and a Federal objective is to be achieved. Accordingly, Federal loan 

receivables occur in programs that serve the public interest and are of relatively high risk 

of default. As these receivables increase, normally delinquencies will correspondingly 

increase. 

• The two agencies with the largest total receivables at the end of FY 2008 are 

Education ($157.1 billion) and the Department of Agriculture (USDA) ($107.3 

billion). Receivables from these two agencies comprise 73 percent of the 

Government’s total receivables (Education 43 percent and USDA 30 percent). 

• Two types of Education receivables accounted for almost all of its receivables: 

Federal Direct Student Loans ($123.6 billion), and Defaulted Guaranteed Student 

Loans ($27.6 billion). 

• Five program areas of the USDA accounted for over $101 billion of its receivables: 

Rural Electric & Telephone Revolving Fund ($40.9 billion), Rural Housing Insurance 

Fund ($25.6 billion), Commodity Credit Corporation ($15.3 billion), Rural 

Development Insurance Fund ($13 billion), and Farm Service Agency ($6.7 billion). 

Analysis of Receivables Data 

• Contributing to the FY 2008 increase in total receivables was a $20.4 billion increase 

in direct and guaranteed loans at the Department of Education. Education’s direct 

student loan portfolio has grown significantly over the last several years and this 

trend is continuing. That portfolio has increased from $71.8 billion at the end of FY 

2001 to $123.6 billion at the end of FY 2008, and by $16.4 billion in FY 2008 alone. 

• Collections Note: Education breaks out its loan consolidations from the amount it 

reports as Collections on Receivables in the Treasury Report on Receivables (TROR). 

At one time, it had reported those consolidations with collections because it considers 

them to be collections. Therefore, Education’s consolidations have been added to its 

collections in this report to arrive at the total agency and government-wide collections 

amount. 
REPORT TO CONGRESS: RECEIVABLES AND DEBT COLLECTION ACTIVITIES OF 

FEDERAL AGENCIES 

 

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Additional Delinquent Debt Data

With the increase in total 

receivables, there was also an 

increase in total delinquencies, 

which rose by 15 percent or $9.6 

billion. The chart to the right 

provides the breakdown, in 

billions, of those delinquencies by 

age. 

 

• At the end of FY 2008, $64.7 

billion (87 percent) of the 

Government’s delinquent debts 

were distributed among six 

agencies: Education, the Department of Defense (DOD), the Social Security 

Administration (SSA), USDA, HHS, and the Small Business Administration (SBA). 

 

 

 

 

 

Delinquencies (in billions) 

Agency FY 2008 

% Change 

from 

FY 2007 

Education $47.8 +22%

DOD $4.6 +4%

SSA $3.7 +7%

USDA $3.4 +3%

HHS $2.9 +24%

SBA $2.3 +16%

TOTAL $64.7 +18%

TOTAL GOV’T $74.5 +15%

0%

20%

40%

60%

80%

100%

Aging of Government-wide Delinquencies 

> 10 yrs $10.9 $7.1 $9.2 $9.6 $11.4

6-10 yrs $12.8 $8.0 $4.7 $5.0 $6.1

2-6 yrs $15.0 $15.4 $12.3 $12.0 $12.7

181 days-2 yrs $14.8 $14.8 $18.1 $18.6 $23.2

1-180 days $17.5 $16.7 $20.6 $19.6 $21.1

2004 2005 2006 2007 2008
REPORT TO CONGRESS: RECEIVABLES AND DEBT COLLECTION ACTIVITIES OF 

FEDERAL AGENCIES 

 

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$7.2

$16.1

$10.1

$6.4

$9.4

$0

$2

$4

$6

$8

$10

$12

$14

$16

$18

$20

Dollars in Billions

2004 2005 2006 2007 2008

Fiscal Year

TOTAL WRITE-OFFS

2. Write-offs 

• Total write-offs in FY 2008 increased 

from FY 2007 by $3 billion to a level 

closer to the amount reported in FY 

2006. 

• The substantial increase in write-offs in 

FY 2005 resulted from greater 

adherence by agencies to established 

write-off policy (See OMB Circular 

No. A-129). Beginning in the third 

quarter of FY 2004, OMB began to 

specifically monitor the Federal 

program agencies’ write-off policies 

and practices. Also, FMS published additional guidance on write-off that year and 

continues to provide ongoing training to the agencies on the topic. Specifically, there 

were substantial one-time write-offs in FY 2005 by the Federal Communications 

Commission (FCC) and the Department of Energy. 

• OMB continues to monitor agency adherence to write-off policy. However, it should 

be noted that, while OMB guidance generally requires write-off when debts are two 

years delinquent, agencies do not write off debts when material collections can be 

documented to occur after two years. 

• Write-offs increased at many agencies in FY 2008. The largest increases were at 

SBA ($1.11 billion), Education ($862 million), HHS ($559.5 million), Commodity 

Futures Trading Commission ($473.9 million), Veterans Affairs ($191.3 million), and 

USDA ($162.5 million). 

3. Interest, Penalties and Costs 

Agencies charge interest, penalties and administrative costs on receivables in accordance 

with applicable loan documents and statutory requirements. See, e.g., 31 U.S.C. 3717. 

Of the $366.6 billion in receivables at the end of FY 2008, $8.8 billion represents unpaid 

interest, penalties and administrative costs. 
REPORT TO CONGRESS: RECEIVABLES AND DEBT COLLECTION ACTIVITIES OF 

FEDERAL AGENCIES 

 

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$0.0

$20.0

$40.0

$60.0

$80.0

In Billions

 Debt Eligible for Referral to Treasury

Starting Amount $68.2 $66.6 $69.8 $61.6 $71.7 

TOP Eligibility $31.8 $33.8 $35.5 $35.6 $44.8

Cross-servicing Eligibility $7.7 $8.9 $10.0 $9.6 $10.9

FY 2004 FY 2005 FY 2006 FY 2007 FY 2008

B - REFERRAL TO TREASURY UNDER THE DCIA

• The DCIA specifically mandates that Federal agencies refer non-tax debts more than 

180 days delinquent to Treasury for collection through TOP and/or Cross-Servicing. 

Certain debts are not eligible for referral to Treasury for either TOP or CrossServicing because of various exemptions permitted under the DCIA or otherwise 

required by law. Debts exempt from both TOP and Cross-Servicing include those in 

appeals or forbearance; debts in litigation or that have been referred for litigation to 

DOJ; debts in foreclosure or in bankruptcy; and foreign sovereign debts. Additional 

exemptions from Cross-Servicing include debts at PCAs, debts being collected by 

internal offset, and debts exempted from Cross-Servicing by Treasury. These 

exemptions are subtracted from the “Starting Amount” (debts more than 180 days 

delinquent plus those classified as Currently-Not-Collectible but not yet closed out) to 

determine “TOP Eligibility” and “Cross-Servicing Eligibility.” 

• At the end of FY 2008, debts eligible for referral to TOP increased by $9.1 billion, 

and debts eligible for Cross-Servicing increased by $1.2 billion from amounts 

reported in FY 2007. During FY 2008, FMS and the reporting agencies continued to 

work cooperatively to improve the accuracy of these eligibility numbers. 
REPORT TO CONGRESS: RECEIVABLES AND DEBT COLLECTION ACTIVITIES OF 

FEDERAL AGENCIES 

 

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III - GOVERNMENT-WIDE DELINQUENT DEBT COLLECTION 

ACTIVITIES

A - TREASURY OFFSET PROGRAM (TOP) 

1. Description

Offset

Offset is a program whereby Federal payments are reduced or "offset" to satisfy a 

person's overdue Federal non-tax debt, child support obligation, and/or state debt. 

Offset referrals and collections are indicated in the charts on the next page. 

Reciprocal Offset Agreements with States 

In January 2007, FMS published a regulation to implement a provision in the DCIA that 

authorizes Treasury and the states to enter into reciprocal agreements to collect each 

other's debts. Under these agreements, Treasury can collect unpaid state debt by 

offsetting Federal non-tax payments, and states can collect delinquent Federal non-tax 

debt by offsetting state payments. Two states, Maryland and New Jersey, signed 

agreements and participated in a pilot program with Treasury, which began in June 2007 

and ended in August 2008. The resulting collections realized by the states, federal 

agencies and FMS indicated that the reciprocal program will be extremely beneficial to 

both the states and the federal government. Therefore, FMS decided to establish the 

program and expand it to additional states in calendar year 2009. Several states have 

expressed interest in participating in the program. 

Federal Payment Levy Program 

The Federal Payment Levy Program (FPLP) is a program whereby delinquent Federal 

income tax debts are collected by levying non-tax payments, as authorized by the 

Taxpayer Relief Act of 1997. Continuous tax levy collections are indicated in the chart 

on the next page. 
REPORT TO CONGRESS: RECEIVABLES AND DEBT COLLECTION ACTIVITIES OF 

FEDERAL AGENCIES 

 

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$34.34

$79.63

$5.26

$105.42

$35.63

$84.61

$5.76

$129.53

$37.48

$88.31

$6.13

$139.71

$45.05

$92.89

$7.92

$156.41

$49.18

$100.10

$10.33

$171.59

$0.00

$50.00

$100.00

$150.00

$200.00

$250.00

$300.00

$350.00

$400.00

Dollars in Billions

TOTAL DEBT REFERRALS TO THE TREASURY OFFSET PROGRAM

Federal Tax $105.42 $129.53 $139.71 $156.41 $171.59 

State Income Tax $5.26 $5.76 $6.13 $7.92 $10.33 

Child Support $79.63 $84.61 $88.31 $92.89 $100.10 

Federal Nontax Debt $34.34 $35.63 $37.48 $45.05 $49.18 

Sep. 2004 Sep. 2005 Sep. 2006 Sep. 2007 Sep. 2008

2. Referrals 

3. Collections 

Collections Through TOP In Millions of Dollars 

Type of Collection FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 

With 

Stimulus 

FY 2008

Without

Stimulus 

Administrative Offset* $109 $123 $144 $187 $244 $244 

Tax Refund Offset – Child 

Support $1,487 $1,580 $1,582 $1,696 $2,830 $1,989 

Tax Refund Offset – Federal 

Non-tax Debt $974 $990 $989 $1,195 $1,948 $1,373 

Tax Refund Offset – State 

Income Tax Debt $218 $232 $216 $219 $378 $289 

Continuous Tax Levy $114 $197 $303 $343 $400 $400 

Total Collected $2,902 $3,123 $3,234 $3,640 $5,800 $4,295 

 *Offset of nontax payments (i.e., payments other than tax refunds) to collect 

delinquent State and Federal debts. 

NOTE: Neither chart includes the referrals and collections made in the State Reciprocal 

Offset Program, which was fully implemented in the latter part of FY 2008. This data 

will be presented in the Report in subsequent years.

$224.65 

$255.53

$271.6

$302.27

$331.20 
REPORT TO CONGRESS: RECEIVABLES AND DEBT COLLECTION ACTIVITIES OF 

FEDERAL AGENCIES 

 

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CROSS-SERVICING REFERRALS

$11.5

$7.5 $8.2 $8.1 $9.3

$0.0

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

$14.0

Dollars in 

Billions

$7.5 $8.2 $8.1 $9.3 $11.5 

FY 2004 FY 2005 FY 2006 FY 2007 FY 2008

$32.6

$70.4

$24.7

$49.9

$80.3

$27.8

$25.3

$78.2

$28.0

$20.5

$74.6

$36.1

$27.3

$82.8

$69.8

$0.0

$50.0

$100.0

$150.0

$200.0

Dollars in Millions

CROSS-SERVICING & PRIVATE COLLECTION 

AGENCY (PCA) COLLECTIONS 

TOP $24.7 $27.8 $28.0 $36.1 $69.8

PCA $70.4 $80.3 $78.2 $74.6 $82.8

DMS $32.6 $49.9 $25.3 $20.5 $27.3

FY 

2004

FY 

2005

FY 

2006

FY 

2007

FY 

2008

B - CROSS-SERVICING AT FMS

1. Description 

Cross-Servicing is the process whereby agencies refer delinquent Federal non-tax debts 

to FMS’s Debt Management Services (DMS) for collection. Treasury utilizes a variety of 

collection tools once agencies refer their debts. Collection tools include Treasury 

demand letters, telephone calls to debtors, referral of debts to TOP, credit bureau 

reporting, use of PCAs, referral of debts to DOJ for litigation, and administrative wage 

garnishment (AWG). 

2. Referrals 

3. Collections 
REPORT TO CONGRESS: RECEIVABLES AND DEBT COLLECTION ACTIVITIES OF 

FEDERAL AGENCIES 

 

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$1.31 $1.45

$1.80

$1.79 $1.81

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

Dollars in billions

Referrals to PSC

$1.31 $1.45 $1.80 $1.79 $1.81

FY 2004 FY 2005 FY 2006 FY 2007 FY 2008

$544.6

$453.9 $463.2 $351.4

$291.5

$0.0

$200.0

$400.0

$600.0

$800.0

Dollars in Millions

PSC Collections

$544.6 $453.9 $463.2 $351.4 $291.5

FY 2004 FY 2005 FY 2006 FY 2007 FY 2008

C - HHS’S DEBT COLLECTION CENTER 

1. Description 

The Program Support Center (PSC), established in 1995, is an operating division within 

HHS that collects debts on a fee-for-service basis for 11 different agencies within HHS 

and several agencies outside of HHS. Collections were down in FY 2008 due to a 

reduction in audit findings and State activity recovery as well as the economic downturn. 

2. Referrals to PSC 

3. Collections at PSC 
REPORT TO CONGRESS: RECEIVABLES AND DEBT COLLECTION ACTIVITIES OF 

FEDERAL AGENCIES 

 

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$2.5

$3.6 $3.6

$3.0 $2.8

$0.0

$1.0

$2.0

$3.0

$4.0

Dollars in Billions

FY

2004

FY

2005

FY

2006

FY

2007

FY

2008

CASH COLLECTIONS FROM CIVIL LITIGATION 

AT DOJ 

D - LITIGATION AT THE DEPARTMENT OF JUSTICE (DOJ) 

1. Description 

When a Federal agency cannot collect a debt administratively using debt collection tools 

such as those available under the DCIA, the agency may refer the debt to DOJ to pursue 

enforced collection through the courts. FMS’s Cross-Servicing Program also has the 

option to refer agency debts to DOJ. 

2. Referrals 

3. Collections

Fiscal 

Year 

Total Civil 

Referrals - new 

debts opened 

Value of New 

Debts 

(in billions) 

2004 7,165 $2.5 

2005 6,723 $5.0 

2006 7,913 $6.1 

2007 9,718 $5.0 

2008 11,559 $3.8 
REPORT TO CONGRESS: RECEIVABLES AND DEBT COLLECTION ACTIVITIES OF 

FEDERAL AGENCIES 

 

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E - EDUCATION STUDENT LOANS

• Since November 1998, Treasury has exempted student loan debts collected by 

Education from mandatory transfer to Treasury for Cross-Servicing, based on 

Education’s demonstrated expertise in collecting student loan debts. Federal Student 

Aid debt collection activities at Education are centralized in Education’s Borrower 

Services-Collections (BSC). BSC services Education's defaulted student loans (loans 

delinquent more than 270 days). Use of the full range of debt collection tools 

outlined in Education’s own statutes and the DCIA is authorized once the loan 

reaches default status. Additionally, BSC collects on student grant overpayments, 

which represent a very small amount of BSC’s total delinquent debt portfolio. 

• Total student loan receivables (principal and interest) serviced by BSC have increased 

from $15.9 billion at FY 2004 year-end to $23.1 billion at FY 2008 year-end; and 

collections have increased from $1.803 billion in FY 2004 to $3.209 billion in FY 

2008. 

Education’s Use of Debt Collection Tools 

(in millions)

Collection Tools FY 2004 

Collections 

FY 2005 

Collections

FY 2006 

Collections

FY 2007 

Collections 

FY 2008 

Collections 

Private Collection Agency $362 $378 $410 $368 $376

Litigation (DOJ) $22 $18 $16 $13 $11

Internal Offset $2 $1 $3 $1 $1

AWG (at Education and PCAs) $186 $237 $251 $281 $304

Treasury Offset $389 $415 $402 $465 $758

Other Tools at Education $59 $50 $51 $46 $42

Total Loan Consolidations 

(at Education and at PCAs) $206 $197 $224 $179 $236

Total Loan Rehabilitations 

(at Education and at PCAs) $587 $786 $954 $1,322 $1,480

• Recoveries from TOP increased by 63 percent, from FY 2007 to FY 2008. The large 

increase was primarily due to the additional amounts collected from offset of the 

2008 stimulus payments. Education still relies heavily on PCAs and refers every 

eligible debt as quickly as possible to one of its 17 PCAs. Education effectively uses 

AWG to collect debts, primarily through its PCAs. Education also uses loan 

consolidations and loan rehabilitations to further reduce delinquencies by moving 

debts back into current repayment status. 
REPORT TO CONGRESS: RECEIVABLES AND DEBT COLLECTION ACTIVITIES OF 

FEDERAL AGENCIES 

 

15

• PCAs rehabilitated $1.407 billion in defaulted loans in FY 2008, up 16 percent from 

the $1.251 billion in FY 2007. New laws enacted as of July 1, 2006 allow borrowers 

to rehabilitate if they make 9 consecutive on-time monthly payments in a 10 month 

period, which is the preferred method for borrowers to cure defaults (other than 

paying the debt in full). The PCAs have also exceeded Education’s expectations in 

this area. Education found that the reduction in regular collections from FY 2006 to 

FY 2007 leveled off between FY 2007 and FY 2008, increasing about $10 million, 

while rehabilitations increased by $156 million for the same period. 

• Education has continued its successful matching program with HHS’s National 

Directory of New Hires Database that, for FY 2008, resulted in the capture of new 

debtor location information on over 1.356 million accounts. Use of the New Hire 

Database led to an additional $454 million in student loan recoveries. 

• BSC did not receive the software components to its updated system that were needed 

to participate in TOP Federal Salary Offset. This was due to a series of new 

congressional mandates that became a higher priority. BSC is currently working on a 

new procurement to replace the Debt Management and Collections Systems (DMCS). 

BSC is also planning to do a pilot test of Federal Salary Offset using the old system 

and some manual processes. Although a full run of all Federal borrowers cannot be 

done, there are processes and procedures that can be worked out through the pilot that 

will inform the requirements for the new system. In the interim, Education uses all 

other available debt collection tools to collect debts owed by Federal employees. 

NOTE: The Education PCA and Student Loans sections of this report do not include 

data from Education’s Federal Family Education Loan Program (FFELP). The loans in 

this program are made by private companies and held by State guarantee agencies (GAs). 

Education pays a GA upon default of a loan (and, therefore, has an “interest” in the loan), 

but the GA conducts the process of collection using many of the same tools, such as TOP, 

PCAs, and AWG, that are employed by Education.
REPORT TO CONGRESS: RECEIVABLES AND DEBT COLLECTION ACTIVITIES OF 

FEDERAL AGENCIES 

 

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F - USE OF PRIVATE COLLECTION AGENCIES (PCAS) 

1. Description 

• Education, FMS, and HHS have each established contracts with PCAs to collect non-tax 

debts owed to the Federal Government. PCAs assist Federal agencies in many ways, 

including establishing repayment agreements and resolving debts administratively by 

determining that a debtor is deceased, disabled, bankrupt, or out of business. 

• Education uses PCAs to collect its portfolio of defaulted student loan debts. Education 

relies heavily on PCAs and refers every eligible debt to one of its seventeen PCAs as 

quickly as possible. Education’s PCAs also initiate Education’s use of administrative 

wage garnishment as a debt collection tool. 

• FMS’s PCA contracts are used as part of its Cross-Servicing Program. Debts that are 

not collected or resolved, generally within 30 days after referral to FMS for CrossServicing, are referred to one of its five PCAs for collection action. FMS's PCAs also 

utilize administrative wage garnishment as an effective collection tool. 

• HHS’s PCA contract is administered by its Program Support Center (PSC), which 

provides centralized debt collection services for HHS’s agencies and bureaus, and 

several other Federal agencies. PSC refers debts to its PCA if payment in full is not 

made or a repayment agreement has not been established within 45 days after the PSC 

receives the debt for collection action. Referrals and collections were lower in FY 2008 

because HHS replaced its PCA during the year, taking over the previous PCA’s 

repayment agreements. The new PCA started with new referrals only. 

2. Referrals 

 Referrals to PCAs 

(in millions) 

Agency FY 2006 FY 2007 FY2008 

HHS $68 $69 $35

FMS $3,500 $3,341 $4,454

Education $13,952 $18,982 $23,863

Totals $17,520 $22,392 $28,352
REPORT TO CONGRESS: RECEIVABLES AND DEBT COLLECTION ACTIVITIES OF 

FEDERAL AGENCIES 

 

17

3. Collections 

 Collections by PCAs 

 (in millions) 

Agency FY 2006 FY 2007 FY 2008 

HHS $9.6 $7.4 $3.8

FMS* $78.2 $74.6 $82.8

Education* $651.8 $639 $672

Totals $739.6 $721 $758.6

*Includes collections by administrative wage garnishment 
REPORT TO CONGRESS: RECEIVABLES AND DEBT COLLECTION ACTIVITIES OF 

FEDERAL AGENCIES 

 

18

APPENDIX I: FEDERAL RECEIVABLES AND DELINQUENT DEBT

The table below presents the ending balances, collections, write-offs, delinquencies, 

delinquencies greater than 180 days, and debts that have been written off and classified as 

Currently-Not-Collectible (CNC) for the credit agencies with the highest ending balances 

at the end of FY 2008. The table groups all other agencies into a single category. At the 

end of FY 2008, 95 percent of the receivables belonged to the 11 agencies listed in the 

table below. 

Federal Receivables and Delinquent Debt

as of September 30, 2008 

(in millions) 

Agency Ending 

Balance 

Collections Writeoffs Delinquencies Delinquencies 

> 180* 

 Currently 

Not 

Collectible 

Education $157,069 $14,440 $1,770 $47,782 $32,025 $228

USDA $107,250 $25,346 $983 $3,346 $2,879 $1,090

SSA $14,912 $3,366 $1,010 $3,737 $2,631 $250

SBA $13,086 $2,403 $1,775 $2,326 $1,995 $1,898

HHS $12,228 $38,997 $1,278 $2,849 $1,795 $8,960

HUD $9,993 $4,074 $162 $282 $209 $404

DOD $8,601 $10,576 $303 $4,622 $4,256 $191

EX/IM1 $6,413 $1,306 $114 $1,980 $1,821 $0

AID2 $5,886 $742 $26 $470 $453 $0

Treasury $5,523 $3,554 $3 $21 $7 $4

Energy $4,091 $5,718 $.2 $134 $109 $2,079

All Other $21,543 $60,826 $1,962 $6,919 $4,579 $2,948 

Gov’t 

Total $366,595 $171,348 $9,387 $74,468 $53,365 $18,052

1

Export Import Bank 

2

Agency for International Development 

Amounts reported as write-offs represent the dollar amount of uncollectible receivables 

written off during FY 2008. 

“Currently-Not-Collectible” (CNC) represents the dollar amount of all debts that have 

been written off by the agency but not yet closed out. Debts classified as CNC for any 

reporting period continue to be reported in that category in subsequent reporting periods 

until closed-out or collected. 

 

* Does not include write-offs reported as CNC. 
REPORT TO CONGRESS: RECEIVABLES AND DEBT COLLECTION ACTIVITIES OF 

FEDERAL AGENCIES 

 

19

APPENDIX II: SOURCES OF DATA 

 

Data contained in this report were obtained from the following sources: 

Part II – Government Debt Portfolio, Collection and Write-offs and 

Appendix I

Source – Treasury Report on Receivables and Debt Collection Activities – Fourth 

Quarter 2008, as reported by Federal agencies to the Department of the 

Treasury. 

Part III – Government-Wide Collection Activities

A & B – Treasury Offset & Cross-Servicing Programs

 Source – Department of the Treasury, Financial Management Service 

C – HHS Debt Collection Center 

 Source – Department of Health and Human Services, Program Support Center 

D – Litigation at the Department of Justice 

Source – Department of Justice, Office of Debt Collection Management 

E – Education Student Loans 

 Source - Department of Education, Borrower Services-Collections 

F – Use of Private Collection Agencies 

 Sources – Department of Education, Borrower Services-Collections 

 Department of the Treasury, Financial Management Service 

 Department of Health and Human Services, Program Support Center